Depending on who you listen to, Dell, once the world\u2019s largest PC vendor
\nfallen on hard times, could have a deal to go private through a leveraged
\nmanagement buy-out in place in the next six weeks (The Wall Street
\nJournal) or in the next week or two (CNBC).<\/p>\n
On the other hand, Toni Sacconaghi, the ace Sanford Bernstein analyst,
\nthinks the whole exercise will come to naught because of the sheer size of
\nthe ~$22 billion-$25 billion deal, one of the biggest LBOs of all time.<\/p>\n
Besides the size of the deal, he says, \u201cyou have a pretty risky environment
\nin the sense that the PC marketplace is going through a lot of change right
\nnow.\u201d<\/p>\n
The last word out of CNBC Tuesday was that Dell could be taken out for
\n$13.50-$14 a share, not the premium that most of the Street seems to be
\nanticipating. The Wall Street Journal waded in later agreeing.<\/p>\n
Silver Lake Partners is apparently the key private equity house Dell has been
\nnegotiating with for the last two or three months. The other name that has
\ncome up is TPG Capital.<\/p>\n
The two might team to buy $2 billion in equity in Dell. Sacconaghi think it
\nwould take $4 billion.<\/p>\n
There\u2019s reportedly no formalized bidding group yet. A sovereign wealth or
\npension fund could get involved. The Wall Street Journal says JP Morgan
\nChase is managing \u201cthe deal process\u201d apparently as an advisor.<\/p>\n
According to CNBC the $15 billion debt financing is oversubscribed.
\nReuters says at least four major banks have been lined up by Silver Lake:
\nCredit Suisse, Bank of America Merrill Lynch, Barclays and the Royal Bank
\nof Canada.<\/p>\n
Because of Michael Dell\u2019s nearly 16% ownership position in the firm,
\nworth maybe $3.6 billion, he\u2019s assumed to be in. Because of that conflict of
\ninterest stockholders have no guarantee of getting the best price. He may be
\nkicking in additional financing perhaps from his multibillion-dollar personal
\ninvestment fund.<\/p>\n